Stock some tea?
Stock some tea?
Decades before the information technology giants of India’s Silicon Valley discovered employee stock options, or Esops, to be the most effective compensation to retain talent, Kolkata’s commodity auctioneers from the 19th century had pioneered the concept of distributing the ownership of a firm among its key employees.
“Produce brokers"—or so they were called—such as J. Thomas and Co., A.W. Figgis and Co., Creswell and Co. and Carritt Moran and Co.—all founded as British partnerships in the latter half of the 19th century—turned themselves into private limited companies in 1947-48 within months of India’s severing ties with the British crown.
For instance, at J. Thomas—the only surviving auctioneers of its vintage and the world’s largest in tea broking for decades—the first Indian was inducted on its board in 1958, and 14 years later, when the last Briton left the company, the company became fully owned by its Indian employees.
Employees are not allowed to sell shares in J. Thomas to anyone outside the company, says managing director Viveck S. Crishna, and as a result the auctioneer continues to remain closely held by its key officials. “When we retire, our shares are redistributed among employees in service at a price determined by the company’s auditor," says Crishna.
The restriction on transfer of ownership has perhaps worked both ways—whereas at 161-year old J. Thomas, employees bound closely by their ownership of the firm stretched themselves to survive difficult times, according to Crishna, the other auctioneers went belly up overstretching themselves in their bid to diversify from tea broking, their woes intensified by their inability to raise adequate capital internally for such ventures.
aniek.p@livemint.com
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